Weak sales at the start of the year, which lingered into the second quarter, cut the profit of palm oil maker, Okomu Oil, by 57 percent in the first half of the year.
Okumu Oil posted a profit of N2.53 billion for six months to June 30, about half of the N5.94 billion announced as profit in the same period last year.
In the six-month period, the palm oil maker saw sales drop to N8.57 billion as against N12.94 billion last year. Revenue has weakened some 34 percent in the review period.
The decline was on the heels of slower sales in the domestic market as export of its agric products improved marginally in the half-year. Sales in Nigeria dropped 38 percent.
Cost of sales declined by 6 percent owing to a decrease in the direct cost of the Oil palm segment.
Notwithstanding, the sharper plunge in sales trickled to gross profit which pared by 38 percent, resulting in weaker gross margin.
Okomu Oil retained N80.25 from every N100 sales after deducting the cost of production. Last year, gross margin was N86.11 per hundred naira sales.
Operating income decreased by 58 percent to N2.91 billion compared to N6.97 billion last year owing to Okomu Oil’s N3.96 billion net operating expenses.
The interest of fixed deposit account and exchange gains saw a big decline which resulted in the Oil plan producer recording N24.79 million finance income whereas it made N232 million last year.
The company’s finance cost decreased by 60 percent also. Gross profit plunges to N2.84 billion, 59 percent lower than N6.94 a year ago.
Net margin, a measure of how much Okomu Oil was able to retain as profit out of every N100 revenue show the company kept 29.52 percent in 2019 half-year down from 45.93 percent it retained same period last year.
On the heels of weaker performance earnings per share fell to N2.65 from N6.23 year-on-year in H1 2019.
Shares of Okomu Oil plunged 6.81 percent on the Nigerian Stock Exchange (NSE) to close at N52 per share on Friday, worsening its loss since the beginning of the year to 31.76 percent.
Okomu Oil is an Edo-based palm oil manufacturer with primary activities in the development of oil palm plantation, palm, oil milling, palm kernel processing, and the development of rubber plantation.
Products of Okomu Oil are palm oil, palm kernel oil, palm kernel cake, Banga (package) and rubber cup lumps.
SEGUN ADAMS
